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SANTA MONICA, CA-Affiliates of local developer Jeff Worthe and Delaware-based Stockbridge Real Estate Funds have acquired one of the rarest of properties in Southern California, an oceanfront development site that is entitled for a 73-room hotel, according to Jones Lang LaSalle Hotels. The new owners acquired the half-acre site on Ocean Avenue near the Santa Monica Pier from Los Angeles-based Hill Street Realty for $34 million, or $465,000 per entitled key, in a deal that was brokered by JLL Hotels as listing agent for the seller.

Vice president Jeremie Babinet of Jones Lang LaSalle Hotels tells GlobeSt.com that the seller spent three and a half years to obtain the city-approved development agreement for the site, which provides for a four-story, high-end boutique style hotel that will feature a separate restaurant, a rooftop pool and a bar. During the entitlement process, the seller worked very closely with the City of Santa Monica and its historical landmark commission to meet their criteria, according to Babinet.

Key features of the project that attracted the City of Santa Monica included the incorporation of two historical buildings into the structure, the creation of a public plaza, and a LEED-certification design, Babinet notes. The property, at 1327, 1333, and 1337 Ocean Ave., is occupied by six buildings, including the two that are considered landmarks and will be retailed as part of the proposed development.

The development site, which is slated for the first new hotel to be built in Santa Monica in 10 years, attracted “a tremendous amount of investor interest,” according to Arthur Buser, president of lodging capital markets for Jones Lang LaSalle Hotels. Buser calls the Santa Monica location “one of the most desirable hotel markets in the country.”

Babinet adds that the site “attracted different investor types from around the world, including global hotel brands, owner/operators and opportunity funds.” The competition for the site reflected “the tremendous demand for entitled California coastal real estate,” Babinet tells GlobeSt.com.

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